HF2510

Purpose of the Bill

The bill aims to modify local optional revenue provisions within the Minnesota education finance system. Its main goal is to improve how school districts can generate and use local optional revenue, giving them more financial flexibility.

Main Provisions

• Increased Local Optional Revenue: For fiscal years 2026 and 2027, the bill sets a base revenue allowance at $724. For fiscal year 2028 and beyond, the allowance is linked to the formula allowance, meaning it can adjust based on specific educational funding formulas.

• Two-Tier System: The local optional revenue is divided into two tiers. The first tier allowance is set at $300, and the second tier is the remainder, calculated by subtracting the first tier from the total local optional revenue allowance.

• District Revenue and Levy Calculations:

  • First and second-tier revenues are calculated by multiplying the respective allowances by the adjusted pupil units of a district.
  • A district's local optional levy is split into first and second-tier levies, determined by multiplying the corresponding revenue by either one or a specified ratio based on the district's market value per pupil.

• Adjustments for Fiscal Years: The bill specifies varying adjustments in second-tier levy calculations for fiscal years 2023 through 2027 and beyond, tied to changes in the district's market values.

Significant Changes to Existing Law

• The bill revises the calculation method for local optional revenue by indexing it to the education formula allowance from 2028 onwards, potentially allowing revenue to increase with changes in the formula.
• It redefines how local optional levies and aids are calculated according to the new tier system, integrating district-specific valuation metrics in the calculations.

Relevant Terms

local optional revenue, school district finance, formula allowance, levy, referendum market value, pupil units, education finance, Minnesota education.